Expect Sensex to touch 20,000 and Nifty to touch 6,000
The domestic market opened higher after taking a breather on Friday, supported by positive global cues. The Sensex opened 54 points higher at 19,474 and the Nifty at 5,842, up 16 points over its previous close. Auto, IT, metals and healthcare counters witnessed good demand in early trade.
Last week's gains induced investors to indulge in profit booking with the indices touching the day's lows at around 10.45am. The Sensex lost 25 points from its opening level to touch 19,449 at its intra-day low, while the Nifty fell nine points from its opening to 5833.
A fresh bout of buying led the indices higher in noon trade. The northward journey continued in the post-noon session on early gains in the European markets and a rise in US stock futures. The benchmarks touched the day's high around 2.45pm, with the Sensex gaining 310 points at 19,730 and the Nifty up 93 points at 5919. While the indices pared some of these gains, they end with highly substantial gains. The Sensex closed at 19,702, up 281 points and the Nifty closed with gains of 82 points at 5,908. The advance-decline ratio on the National Stock Exchange was positive 1244:180. We now expect the Sensex to hit 20,000 before hitting a short-term barrier; Nifty will hit 6,000.
The broader indices also had a decent close. The BSE Mid-cap index gained 1.67% and the BSE Small-cap index jumped 2.83%.
All sectoral gauges closed higher with the BSE Capital Goods (up 2.38%) as the top gainer. BSE IT (up 2.18%), BSE TECk (up 1.84%), BSE Auto (up 1.83%) and BSE Bankex (up 1.78%) were the other major gainers.
Mahindra & Mahindra (up 4.75%), Jaiprakash Associates (up 3.25%), BHEL (up 2.84%), HDFC Bank (up 2.78%) and TCS (up 2.70%) were the top performers on the Sensex. On the other hand, Reliance Communications (down 2.24%), Hindustan Unilever (down 1.62%) and Cipla (down 1.51%) were the noteworthy losers.
State-owned oil firms will lose a whopping Rs1,74,000 crore on selling fuel at government-controlled rates this fiscal, 68% more than what they lost when crude oil touched an all-time high in 2008-09.
The revenue loss will be the highest-ever, even more than what they lost in 2008-09 when crude oil touched an all-time high of $147 per barrel. The three oil firms currently lose Rs16.76 per litre on diesel, Rs28.33 a litre on kerosene and Rs315.86 per 14.2-kg domestic LPG cylinder.
Markets in Asia settled mostly higher on signs of steady growth in the global economy. However, the Seoul Composite edged lower, pulled down by refining stocks after SK Energy said on Sunday that it would lower petroleum and diesel prices slightly for three months, to help government efforts to tame inflation.
The Hang Seng surged 1.46%, the KLSE Composite added 0.01%, the Nikkei 225 gained 0.11% and the Straits Times advanced 0.65%. On the other hand, the Jakarta Composite declined 0.20% and the Seoul Composite lost 0.24%. The Shanghai Composite was closed for trade on account of a local holiday and will re-open on Wednesday.
Back home, foreign institutional investors were net buyers of stocks worth Rs415.28 crore on Friday. On the other hand, domestic institutional investors were net sellers of shares worth Rs412.63 crore.
Wipro Technologies, the global IT business of Wipro (up 0.99%), a leading Information technology, consulting and outsourcing company, on Friday announced that it has signed an agreement to acquire the global oil and gas information technology practice of Science Applications International Corporation (SAIC), for an all-cash consideration of around $150 million, subject to adjustments.
SAIC's global oil and gas information technology practice provides consulting, system integration and outsourcing services to global oil majors with significant domain capabilities in the areas of digital oil field, petro-technical data management and petroleum application services addressing the upstream segment.
Announcing its provisional results, state-owned BHEL reported a 39.66% growth in profit after tax to Rs6,021 crore for the fiscal year ended 31 March 2011 compared to Rs4,311 crore in the year-ago period. The company's total turnover increased to Rs43,451 crore in the 2010-11 fiscal from Rs34,154 crore in the previous year. The stock gained 2.84% at the end of the session.
Fortis Malar Hospitals today said it has taken over operations and management of cardiac centre at 170-bed Oasis Hospitals in Sri Lanka. Fortis Malar Hospitals, which is a subsidiary of Fortis Healthcare (India) (up 3.19%) did not give any details of the financial involved.
The Colombo-based centre has been renamed as 'Fortis Oasis Cardiac Centre', Fortis Malar Hospitals said. The cardiac centre will be fully equipped to cover all aspects of cardiac care ranging from prevention, diagnosis, treatment and rehabilitated cardiac care.
According to the India Meteorological Department, the epicentre of the quake was on the Indo-Nepal border and occurred at 5.02pm. It lasted for three seconds
NEW DELHI: An earthquake measuring 5.7 on the Richter scale struck North India and its effect was felt in Delhi, Ghaziabad, and Noida.
The India Meteorological Department said the epicentre of the quake was on the Indo-Nepal border and occurred at 5.02pm. It lasted for three seconds.
Police and fire brigade said there was no report of any casualty or damage as yet.
High prices have not slowed demand; gold as investment will have to compete with a wider range of options
India's cumulative annual demand for gold is expected to increase to over 1,200 tonnes by 2020, an estimated growth of 30%, according to the World Gold Council (WGC). This is valued at about Rs2.5 trillion at current prices.
The WGC stated in its report, "India: Heart of Gold", which was published last week, that gold demand in the country has grown by 25% over the last decade, despite a 400% rise in prices.
Rapid growth is improving incomes and savings, which has led to greater gold purchases. In 2010, total annual consumer demand was 963.1 tonne.
A significant part of this demand comes from a growing middle class that is 64 million strong, a rising savings ratio of 30%-40% and a strong cultural affinity for gold, according to the WGC. Increasing income is expected to increase gold purchasing power by about 3% per annum.
India accounts for 32% of global jewellery. Gold jewellery contributed around 75% of total gold demand in the last decade and more than 50% of this buying has been motivated for investment purposes. Indians hold the largest stock of gold in the world, and 18,000 tonnes of this is held by households.
Around 50% of the country's total population is under the age of 25, so it is expected that there will be approximately 15 million weddings per annum over the next decade. Gold is an integral part of weddings and this will drive around 500 tonnes of new gold demand per annum, together with a further 500 tonnes of existing gold being gifted by one family to the next.
Globalisation has brought various changes in Indian consumers' tastes with buyers looking for jewellery accessories in the range of 18 to 22 carat.
The rural agriculture sector accounts for more than two-third of gold demand. The sector is currently growing at less than 1% per annum and this is expected to increase at 5% per annum with increasing purchases in rural communities.
Dr R Kannan, vice chair of the Solvency Sub-committee of the International Association of Insurance Supervisors, says that the gold demand in India is influenced not only by prices, but by macro-economic, monetary and policy variables that include income, interest rates, exchange rates, personal income-tax, government spending and wealth.
WGC says that in the last five years future gold purchase intent in India has remained demonstrably stable, in spite of rising gold prices during the period.
Gold has also become an integral part of India's currency reserves. The share in total reserves declined over the past decade due to the growth in dollar-denominated assets. Between 1996 and 2001, Indian gold sales were broadly stable in value terms, averaging Rs284 billion per annum. However, Indian jewellery demand surged to 745.7 tonne in 2010, 13% above the previous peak in 1998, because of rising gross domestic product (GDP) and the removal of import controls.
However, the young generation today has many investment options and this could still be a major challenge for gold. The desirability for gold will need to be sustained, as consumers will be increasingly influenced by Western luxury goods and investment markets.
In view of the Reserve Bank of India's policy of encouraging Indian savers to hold less physical assets (gold and property) and to increasingly hold financial assets, the financial services industry will need to introduce sustainable gold-based investment solutions in the market.